A verbal lease agreement is often an alternative to a written lease. However, this type of contract can bring tax and legal problems to both the landlord and the tenant.

Throughout this text from Advogados em Braga you will learn what type of lease agreement this is, what risks you run, and how you can best resolve any problems that may arise while you have an active verbal lease agreement. 

What is a verbal lease agreement?

Mm Lease agreement A verbal agreement is an informal agreement that is not put in writing. In this type of agreement, both parties involved are aligned on aspects such as the rental amount, the property, and the contract duration. 

This is a common practice in Portugal, particularly when dealing with older leases or family homes. However, the existence of this type of contract can raise legal issues. 

Is a verbal lease agreement valid?

Yes. A verbal lease agreement is valid, but only exceptionally. According to the law (Article 1069 of the Civil CodeContracts should have even minor issues set out in writing. 

However, if it is proven that people live in the property due to a legal agreement, the rules of the lease may apply. 

What are the risks of verbal leases for landlords and tenants?

A verbal lease agreement can bring some risks to both parties, such as:

LandlordDifficulty in demanding overdue rent, updating the rent amount, or proving the agreed-upon payment term;

TenantLack of housing security, risk of sudden eviction, and difficulty in obtaining proof of address for tax or residency purposes.

Under what conditions is a verbal agreement valid under the law?

There are specific conditions under which a verbal lease agreement is valid under the law:

• Regular bank transfers of income;
• Testimonies from neighbors;
• Written messages between the parties;
• Utility bills (water, electricity, internet) in the tenant's name.

When such evidence is proven, it can be considered that there was a verbal lease agreement. However, a written lease agreement is still advised. 

What does the law say today (article 1069 of the Civil Code and Law 13/2019)

According to Article 1069 of the Civil Code, a verbal lease agreement must also be formalized in writing, as this is essential to define the rights and conditions between the parties involved. 

In the case of Law No. 13/2019, This reinforced the guarantees in urban leases, and requires the communication of the contract to... Her Majesty's Revenue and Customs. 

If you don't have a written contract, you may be subject to tax penalties. 

What guarantee does a verbal contract offer?

A verbal lease agreement offers limited guarantees. In the case of the tenant, they are only entitled to the minimum legal guarantees, such as the right to prior notice before eviction. 

In the case of the landlord, they cannot prove the existence of the contract, which complicates the collection of rent or changes to the rent amount. 

How can I prove a verbal lease agreement?

In order to prove a verbal lease agreement, there are documents you should have:

• Proof of rent payment;
• Electronic correspondence (emails, messages);
• Contracts for the supply of energy, water or telecommunications;
• Statements from witnesses confirming the existence of the lease.

Such evidence must be sent to the Tax Authority, to ACT or in court to validate the existence of the contract.

What should I do if I have a verbal lease agreement?

If you have a verbal lease agreement, you should formalize it as soon as possible. You should propose to the other party involved that this agreement be put in writing. 

If the other person refuses to formalize the document, you can file a complaint with the Tax Authority or the City Council in order to regularize the situation and avoid future legal complications.

How do I report a lease without a contract?

If you wish to terminate a verbal lease agreement, there are steps you can take:

• Report the matter to the Tax and Customs Authority (AT) via the e-Counter or the Finance Portal;
• You can also contact the Authority for Working Conditions (ACT), especially if there are situations of coercion or abuse.

Thus, the landlord can be notified of the situation and proceed with the necessary tax and contractual regularization. 

How can a lawyer provide support in matters related to verbal lease agreements?

Mm Solicitor This professional is a key figure in situations involving a verbal lease agreement. They can:

• Analyze the available evidence and assess whether the verbal contract is recognizable;
• To help formalize a valid written contract;
• To assist in filing a complaint or regularizing a tax issue;
• Representing the client in cases of eviction, litigation, or rent collection.

No Lawyers in Braga It has duly qualified professionals, providing the best support to advise you and protect your rights. 

Conclusion 

Even though it may be valid in exceptional situations, a verbal lease agreement can be a very risky option. Since there is no written contract, neither the landlord nor the tenant is protected from potential tax and legal problems. 

The best option is to formalize the contract, which can be done in agreement with the other person involved. If there is no consensus, a lawyer is the best option to reach an agreement so that all parties involved benefit.